American brand GAP opened its first store this Saturday in Guayaquil and their plans are between four and six new ones in this city and Quito in the next two years and bring two more brands from the same group into the country. “Something catastrophic would have to happen with new elections, if there is a policy against foreign direct investment in the country, for someone to decide to stop this growth,” said Antonio Burgos, CEO of Costa Rican company AR Holdings, which manages the group’s brands in Ecuador.
When the government changed, people started talking about the ‘Lasso effect’ and several international brands came to the country, for example Old Navy, which they also manage. At this point with the death on the cross, what has changed?
We already came with some plans, today nothing has changed, with the new elections something catastrophic would have to happen, if there is a policy that is against direct foreign investment in the country to decide to stop that growth. I am commenting on this by looking at what we have on the table today, we have an absolutely democratic state, where a political decision is made and everyone respects it, that is the most valuable thing that a person as a businessman sees, that exists. institutional stability.
Something that also helped a lot and which was undoubtedly an initiative of the Guillermo Lasso government is the reduction of the foreign exchange outflow tax (ISD) because otherwise it would make the operation too expensive, since the import taxes are already quite high in Ecuador and also when I pay my supplier abroad for that stock, I have to leave 5% there because tax makes me withdraw 5% to everyone. It’s a tax that goes directly to the price of what people buy, who buys a dollar or who buys $5,000. The tax will remain at 2 percent from December 31, which is a huge relief for business. Such things undoubtedly helped a lot to stimulate the desire to invest more.
And given the complicated global environment, have you adjusted anything in your plans?
We opened between 30 and 40 stores in different countries in Latin America during the pandemic, the current economic environment is really more complicated for retailers once again, it has nothing to do with certain political issues in one country or another, that’s not it, it’s a little bigger than that, as an organization we are used to working in a constant storm and this gives us a certain level of resilience that allows us to continue with the plans as they are. People’s consumption patterns have not changed after the pandemic, everyone said a new tomorrow and what we see is less remote work, more face-to-face, people like to go to shops, they like to go to shopping centers.
What plans do you have with GAP in Ecuador?
On Saturday we opened our first store in Guayaquil, we invested more or less 750,000 dollars in just the premises and remodeling, furniture, no inventory. Each GAP store generates between 20 and 25 direct jobs, indirect employment is also important. We hope to open at least four to six GAP brand stores in Ecuador in the next two years, initially very focused on Quito and Guayaquil, and a little more advanced now in related cities such as Manta.
You run Forever 21, Old Navy and now GAP, are you divided by target audience?
Yes, each has a specific audience, in the case of GAP it shares a lot with Old Navy’s clientele because it is a brand that also has products for the whole family: men, women, boys, girls and babies. GAP is timeless, you can buy pants today and wear them for five or ten years, which are always in effect.
Can it be said that GAP has a higher status within the brands?
GAP is the brand with which the GAP Inc. group was created, it is the most recognizable or the one with the greatest heritage value because it is the oldest and has positioned itself very well in the world: you see a lot of people walking around with a T-shirt, sweater, that says GAP on the front. The price of GAP is a little higher than Old Navy, they have different designs and they are of different quality. Forever is a much younger audience. But our value proposition is that GAP’s prices are the same as in the United States. And in these first three weeks of opening, we have 30% and 40% discounts on the entire store, and after that there will continue to be discounts of all kinds, as happens in the United States. We have a loyalty program where every purchase of the brands that we represent and will continue to open, with Athlete and Banana Republic, earns points that range between 3% and 5% and can be redeemed for any brand and (reducing ISD) is what it also allows us these discounts, if the prices were the same as in the United States, otherwise it would be difficult, impossible.
When will these new other brands open?
Athleta for this year in Quito and Banana Republic maybe for the first half of next year, the city is nearing the end of defining it, we are in negotiations with shopping centers.
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